Correlation Between Otsuka Information and Genesis Technology

Can any of the company-specific risk be diversified away by investing in both Otsuka Information and Genesis Technology at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Otsuka Information and Genesis Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Otsuka Information Technology and Genesis Technology, you can compare the effects of market volatilities on Otsuka Information and Genesis Technology and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Otsuka Information with a short position of Genesis Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otsuka Information and Genesis Technology.

Diversification Opportunities for Otsuka Information and Genesis Technology

0.32

Correlation Coefficient

Otsuka Information  Genesis Technology

Weak diversification

The 3 months correlation between Otsuka and Genesis is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Otsuka Information Technology and Genesis Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Technology and Otsuka Information is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Otsuka Information Technology are associated (or correlated) with Genesis Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Technology has no effect on the direction of Otsuka Information i.e., Otsuka Information and Genesis Technology go up and down completely randomly.

Pair Corralation between Otsuka Information and Genesis Technology

Assuming the 90 days trading horizon Otsuka Information Technology is expected to generate 0.94 times more return on investment than Genesis Technology. However, Otsuka Information Technology is 1.06 times less risky than Genesis Technology. It trades about 0.06 of its potential returns per unit of risk. Genesis Technology is currently generating about 0.04 per unit of risk. If you would invest  17,300  in Otsuka Information Technology on December 24, 2024 and sell it today you would earn a total of  1,200  from holding Otsuka Information Technology or generate 6.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Otsuka Information Technology  vs.  Genesis Technology

Otsuka Information

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Otsuka Information Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Otsuka Information may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Genesis Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Genesis Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Genesis Technology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Otsuka Information and Genesis Technology

The main advantage of trading using opposite Otsuka Information and Genesis Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otsuka Information position performs unexpectedly, Genesis Technology can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Genesis Technology will offset losses from the drop in Genesis Technology's long position.

The idea behind Otsuka Information Technology and Genesis Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.